EVERGREEN FIBREBOARD BERHAD ("EFB" or the "Company")Proposed acquisitions of shares for a total purchase consideration of Baht 1.0 Million to be wholly satisfied in cash ("Proposed Acquisition")

General Announcement Reference No CI-070615-1559A

Company Name	:	EVERGREEN FIBREBOARD BERHAD
Stock Name	:	EVERGRN
Date Announced	:	15/06/2007

 

Type	:	Announcement
Subject	:	Evergreen Fibreboard Berhad ("EFB" or the "Company") - Proposed acquisitions of shares for a total purchase consideration of Baht 1.0 Million to be wholly satisfied in cash ("Proposed Acquisition")

Contents :

1. INTRODUCTION

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  The Board of Directors of EFB is pleased to announce that EFB is acquiring a company in business of Electricity, Steam and Heat cogeneration using biomass from plantation wood waste, sawmill, Medium Density Fibreboard and Particle Board waste ("the Proposed Acquisition").

2. DETAILS OF THE PROPOSED ACQUISITION

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  EFB had on 15th June 2007 entered into a Sale and Purchase Agreement ("SPA") with Teng Weng Cheong, Lee Kwai Choon, Chang Eng Hwa, Wannipa Saisalam, Darunee Petchsri, Supa Manee and Janya Buasri (the "Vendors") to purchase 9,994 (Nine Thousand Nine Hundred Ninety Four) number of shares equivalent to 99.94% of the total shares in ECO Generation Co. Ltd. for a total purchase consideration of Baht 1.0 million approximately RM100,000 (Ringgit Malaysia :One Hundred Thousand) ("Purchase Consideration") to be wholly satisfied in cash. This will make Eco Generation Co. Ltd a subsidiary of Evergreen Group ("the Group").

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  2.1 Salient Terms of the Proposed Acquisition

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      The purchase consideration for the Proposed Acquisition shall be payable to the Vendors upon completion of the SPA that shall take place on the day following the presentation of relevant share transfer documents to the authorities or fourteen (14) days thereof, whichever is the earlier ("Completion Date") from the date of SPA.

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  2.2 Basis of arriving at the Purchase Consideration and mode of satisfaction
  
  The Purchase Consideration which will be satisfied in cash, was arrived on a willing-buyer willing-seller basis after taking into consideration the following:
  

(a) the par value of share in ECO Generation Co. Ltd .

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      (b) the value of approvals by the Thai authorities and cooperate tax exemptions acquired by ECO Generation Co. Ltd.
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      EFB will not assume any additional liabilities arising from the Proposed Acquisition.
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      ECO Generation Co. Ltd. (Co. No. 0905549001332) is a company incorporated in Thailand on 8th June 2006 with issued and paid up capital of Baht 1.0 Million consisting of 10,000 ordinary shares of Baht 100 each. It was approved for the purpose of Generating and Selling 4.8 megawatts of electricity and 20 tons of Steam at 13 bar for Medium Density Fibreboard heat energy requirement. Necessary approval needed from the government authorities has been obtained for the company including the plant which will be located adjacent to Evergreen's subsidiary (Siam Fibreboard Co. Ltd.) in Haadyai, Thailand.
  
  2.3 Liabilities to be assumed
  
  2.4 Source of Funds
  
  The Proposed Acquisition shall be funded by way of internally generated funds.
  
  2.5 Original cost of investment
  
  The original cost of investment on shares for its paid up capital is Baht 1.0 Million approximately RM100,000.
  
  2.6 Background information on ECO Generation Co., Ltd.
  
  

3. RATIONALE FOR THE PROPOSED ACQUISITION

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  Electricity which is being generated by ECO Generation Co., Ltd. is mainly for the supplying our 3rd MDF Line under our subsidiary, Siam Fibreboard Co. Ltd. that is expected to commence production in the 3rd quarter of 2008. As electricity is integral to the production, continuous quality electricity supply is inevitable as to achieve maximum productivity with a controlled cost.
  
  With approval on cooperate tax exemption for 8 (eight) years ending in 2015 granted by the Board of Investment in Thailand, this acquisition will definitely benefit the Group in terms of its shareholder's fund.

4. PROSPECTS AND RISK FACTORS

4.1 Prospects

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      The Board of Directors of EFB are of the opinion that there is a necessity in having an additional energy generation plant to support its additional MDF Line in its subsidiary in order to have a cost effective production with a constant quality supply of electricity.

4.2 Risk factors

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      The business of ECO Generation Co., Ltd. is subject to similar business and commercial risk experienced by the EFB Group. However, the activities by ECO Generation Co. Ltd. cannot be guaranteed and is therefore exposed to sovereign risks such as changes in government or its rulings and etc.
      
      

5. FINANCIAL EFFECTS

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  The Proposed Acquisition does not have any effect on the issued and paid up share capital, gearing, net asset position and the shareholding structure of EFB as the Proposed Acquisition will be wholly satisfied in cash.
  
  The Proposed Acquisition will not have any effects on the earnings of the EFB Group for the financial year ending 31 December 2007 as it is expected to be completed in the 1st half of 2008.
  
  Nevertheless, the Board of Directors of EFB is confident that the Proposed Acquisition will contribute positively to the future earnings of EFB Group.

6. APPROVALS REQUIRED

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  The Proposed Acquisition is not subjected to EFB's shareholders approval.

7. DIRECTORS' AND SUBSTANTIAL SHAREHOLDERS' INTEREST

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  None of the Directors or substantial shareholders of EFB or persons connected to them have any interest, direct or indirect, in the Proposed Acquisition.

8. STATEMENT BY THE BOARD OF DIRECTORS

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  The Board of Directors of EFB, having taken into consideration all aspects of the Proposed Acquisition and is of the opinion that the Proposed Acquisition is in the best interest of the Company and its shareholders.

9. ESTIMATED TIME FRAME FOR COMPLETION

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  Barring any unforeseen circumstances, the Proposed Acquisition is expected to be completed by the end of July 2007.

10. SECURITIES COMMISSION'S POLICIES AND GUIDELINES ON ISSUE/OFFER OF SECURITIES

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  The Proposed Acquisition does not depart from the Securities Commission's Guidelines on Issue/Offer of Securities.

11. DOCUMENTS FOR INSPECTION

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  The SPA will be available for inspection following the date of this announcement for a period of one (1) month at EFB's registered office at Suite 6.1A, Level 6, Menara Pelangi, Jalan Kuning, Taman Pelangi, 80400 Johor Bahru between Mondays to Fridays during the hours of 9.00 am to 5.00 pm except for public holidays.
  

This announcement is dated 15th June 2007.